{"id":34095,"date":"2013-11-24T10:04:23","date_gmt":"2013-11-24T15:04:23","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=34095"},"modified":"2023-04-27T10:35:43","modified_gmt":"2023-04-27T14:35:43","slug":"enhancing-trader-performance-pattern-seeking-addiction","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/enhancing-trader-performance-pattern-seeking-addiction","title":{"rendered":"Enhancing Trader Performance: Pattern-Seeking Addiction"},"content":{"rendered":"

*****David Blair, The Crosshairs Trader, is a blogger\/trader\/educator who does a wonderful job of sharing research on elite performance and how it relates to trading. Below is his latest post for the SMB trading community.***** \u2014 Editor\u2019s Note<\/p>\n

We stock traders are notorious pattern seekers, \u201cfinding\u201d everything from head and shoulders to triangles to cups with handles in price charts. We come by it honestly as we are born with a pattern-seeking instinct to help us make sense of the world around us. If we do so outside the charts is it not expected that we will do so inside? There is nothing inherently wrong with pattern seeking, as it is at the heart of much technical analysis, whether it is in the patterns mentioned above or in trends or in fundamental analysis where past performance is a pattern for future out performance (a continuation of the previous pattern). Where we run amok is when we allow the patterns to become more meaningful than the actual evidence. Just like rules are made to be broken, patterns are made to fail and, if we are not careful, can fool us into thinking we are seeing something that is little more than a coincidence.<\/p>\n

The following articles can better help us understand and appreciate our pattern-seeking tendencies thereby enhancing our ability to overcome any adverse addictions we may have toward them.<\/p>\n

\u201cOur brains are wired to force us into forecasting; it is a biological imperative. In fact, humans are born with what I’ve come to call \u2018the prediction addiction.\u2019\u201d (CNN MONEY<\/a>) <\/span><\/p>\n

\u201cPresented with random, unstructured patterns, our brains will often force them into the molds and templates we already have.\u201d (Adam H. Grimes<\/a>) <\/span><\/p>\n

\u201cWe have no error-detection governor to modulate the pattern-recognition engine.\u201d (Scientific American<\/a>)<\/span><\/p>\n

“Perhaps the greatest strength and weakness of the human brain is its hard-wired tendency for pattern-recognition.” (The Financial Philosopher<\/a>)<\/span><\/p>\n

“Our brains seek patterns in coincidences.” (Bernard D. Beitman, MD) <\/span><\/p>\n

\u201cWe as investors and traders need to be constantly on alert to situations where our brains can fool us into thinking we can foresee the future.” (Abnormal Returns<\/a>)<\/span><\/p>\n

\u201cWe are primed to look for certain data to fit our theories.\u201d (Michael Shermer\u2019s video on Cognitive Bias and Pattern Seeking)<\/span><\/p>\n

David Blair<\/b><\/p>\n

THE CROSSHAIRS TRADER
\n<\/b>www.thecrosshairstrader.com
\nhttp:\/\/www.thecrosshairstrader.com\/crosshairs-blog\/<\/p>\n

Related blog posts:
\nThe Money Trade<\/a>
\n Technical Analysis: Four Basic Principles<\/a><\/p>\n

No relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"

*****David Blair, The Crosshairs Trader, is a blogger\/trader\/educator who does a wonderful job of sharing research on elite performance and how it relates to trading. Below is his latest post for the SMB trading community.***** \u2014 Editor\u2019s Note We stock traders are notorious pattern seekers, \u201cfinding\u201d everything from head and shoulders to triangles to cups with handles in price charts. … Read More<\/a><\/p>\n","protected":false},"author":1042,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1935,1,455],"tags":[195,3582,758,1332],"class_list":["post-34095","post","type-post","status-publish","format-standard","hentry","category-david-blair","category-general-comments-2","category-trading_psychology","tag-pattern-recognition","tag-pattern-seeking","tag-patterns","tag-technical-analysis","no-post-thumbnail"],"yoast_head":"\nEnhancing Trader Performance: Pattern-Seeking Addiction | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/enhancing-trader-performance-pattern-seeking-addiction\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Enhancing Trader Performance: Pattern-Seeking Addiction | SMB Training\" \/>\n<meta property=\"og:description\" content=\"*****David Blair, The Crosshairs Trader, is a blogger\/trader\/educator who does a wonderful job of sharing research on elite performance and how it relates to trading. 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